China announces plan for new tax on carbon emissions
Denver, Colorado, United States
China, long an international holdout with regards to climate change science and solutions, will introduce new taxes meant to preserve the environment, according to a senior government official.
The Chinese government will collect an environmental protection tax and a tax on carbon dioxide emissions in lieu of pollutant discharge fees, as reported in an article published on the Ministry of Finance website by Jia Chen, head of the tax policy division of the MOF.
To conserve natural resources, the government will begin taxing coal based on prices rather than sales volume, and will also be raising coal taxes. A resource tax will also be levied on water use.
China, one of the world’s largest emitters of greenhouse gas, has set goals for cutting emissions as well. The government wishes to reduce carbon intensity – the amount of carbon dioxide emitted per unit of economic output – by up to 45 percent by 2020.
There has been no timeline stipulated for the institution of these reforms.
The article from the Ministry of Finance did not recommend a specific tax rate, but pointed to a three-year-old proposal that would have instituted a 10-yuan ($1.60 US) per ton tax on carbon in 2012, raising it to 50-yuan ($8 US) by 2020. This would not be expected to make a serious dent in global warming, though the tax may still make a beneficial impact in severely-polluted China. It has been estimated that China’s CO2 output in 2030 would equal the current global output, and the country is home to more than 2000 coal-fired power plants, with one new plant going into operation every four to seven days. Even a small tax – smaller than the proposed changes from government experts, in fact – could still raise revenue and provide an incentive to reduce emissions, helping to boost China’s renewable energy industry, according to a paper from the Chinese Academy for Environmental Planning.
Climate change experts and economists alike have argued for phasing in taxes on the release of carbon dioxide from the burning of fossil fuels, penalizing big emitters and encouraging consumers and businesses to reduce their use of electricity and gasoline. These experts argue that over time, emissions would come down and the hope is that global temperatures – on the rise since the industrial revolution – would stabilize or even decline, setting off a chain reaction that would prevent a rise in sea levels and other long-term climate problems.What does China’s move toward a carbon tax mean for a similar tax in the United States? That’s less than clear. A carbon tax or cap & trade program could accelerate the United States’ shift away from coal and towards natural gas and renewable energy. Many members of Congress refuse to even discuss it, claiming that taxes like the one being bandied about in China would wreck an already-fragile U.S. economy.